Reliance-Aircel merger talks collapse
The proposed merger of billionaires Anil Ambani and T Ananda Krishnan’s mobile-phone businesses in India collapsed, in a blow to the companies’ plans to pare debt and gain scale to better take on bigger rivals.
Mr Ambani’s Reliance Communications and Mr Krishnan’s Aircel were due to complete the transaction this year amid an intensifying price war that had worsened with the entry of Mr Ambani’s older brother Mukesh, India’s richest person, into the wireless phone services market a year ago.
Legal and regulatory uncertainties and intense competition – along with policies adversely impacting bank financing for telecom companies – have affected industry dynamics, Reliance Communications said in an exchange filing yesterday.
The deal would have created India’s fourth-largest carrier and given the companies more room to pay down combined debt that soared to about 600 billion rupees (Dh33.75bn) as of the end of last year. Aircel was one of several deals that Mr Ambani was pushing as a way to reduce Reliance’s debt.
Reliance Communications will consider an alternate plan to cut debt, which includes sharing and trading off its airwaves valued at about 190bn rupees, the company said. It will also consider plans to monetise its real estate, tower and fibre businesses.
Under the terms of the proposed merger with Aircel, Reliance would have transferred more than 40 per cent of its debt, or 200bn rupees, to a new joint venture.
Aircel, which is controlled by Maxis Communications, would have offloaded 40bn rupees of debt to the venture
For Mr Krishnan, Malaysia’s third-richest person, a deal with Reliance would have helped him hedge some of the risk of vying for subscribers in India’s fragmented mobile phone services market.